TCS has announced that it will lay off 2 per cent of its global workforce (about 12000 people), primarily from middle and senior levels. It is being seen as the clearest sign that the IT business model is being changed. The long-standing focus on headcount as a metric is giving way to a sharper focus on productivity outcomes and future readiness. Over a million jobs across testing, documentation and programming could become redundant in the coming years due to AI.
Traditionally, clients were offered low-cost services overseas, based on manpower and process execution, This model was based on scale. IT firms hired large number of engineers, charged clients based on how many people were assigned to a project, and delivered basic software services and digital transformation work. Clients mainly wanted cost savings. Expectations have new changed. Clients want faster results, flexible pricing based on outcomes and innovation, not just execution.
Another factor is the narrowing of global wage differences. Automation enables to deliver the same work with fewer people. The pyramid model with several layers of managers is difficult to sustain. The senior-level employees thrived in legacy projects are now under pressure to adapt to new ways of working.
Across the world, companies are cutting jobs and reorganizing their teams. Some attribute it to AI, and others to cost pressures, over hiring or changing business needs. The companies are adapting to a future were automation plays a central role. And being large is not enough. What matters is efficiency and innovativeness.
The layoffs are not entirely due to AI but due to mismatching of skills. All this is happening even before AI reaches its peak. These are early days. Autonomous agentic AI will soon be deployed at scale. The impact will be far greater.
The older approach of hiring big and delivering on scale is not enough. The needs of the clients are changing. The global demand is changing. The budgets are tighter. We require new platforms, creation of intellectual property (IP), investments in talent with newer skills and strategic role playing.
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